ADT 2011 Annual Report Download - page 290

TYCO INTERNATIONAL LTD.
NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011
1. BASIS OF PRESENTATION
Tyco International Ltd. (Tyco or the Company) is the holding company of Tyco Group with a
listing on the New York Stock Exchange (NYSE). Tyco International Ltd.’s principal activity is the
holding of subsidiaries.
The Company has a 52 or 53-week fiscal year that ends on the last Friday in September. Unless
otherwise indicated, references in the financial statements to 2011 and 2010 are to the Company’s fiscal
years ending September 30, 2011 and September 24, 2010, respectively. Fiscal 2011 was a 53-week year
which ended on September 30, 2011. Fiscal year 2010 was a 52-week year.
The accompanying financial statements comply with Swiss Law. The financial statements present
the financial position of the holding company on a standalone basis. Additionally, Note 14 includes
certain supplemental information described under articles 663-663h of the Swiss Code of Obligations
for the consolidated financial statements of the Company. The notes are presented in Swiss Francs,
with the exception of Notes 7, 12, 14 and 15 which are presented in U.S. Dollar amounts.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Cash and cash equivalents
Cash and cash equivalents are considered to be all cash on hand, deposits and highly liquid
investments with an original maturity of three months or less at time of purchase.
b) Investments in subsidiaries
Investments in subsidiaries are equity interests, which are held on a long-term basis for the
purpose of the holding company’s business activities. They are carried at a value no higher than
their cost less adjustments for impairment. Investments are reviewed quarterly for impairment
based on the portfolio method.
c) Translation of foreign currencies—translation of the U.S. Dollar ($) functional currency into Swiss
Francs (CHF)
Assets, other than investments in subsidiaries, and liabilities are translated at year end exchange
rate. Investment in subsidiaries and shareholders’ equity are translated at historical rate. During
the year ended September 30, 2011 and September 24, 2010, income and expenses were translated
using the average monthly exchange rate and average year to date exchange rate, respectively,
except for dividend income, which is translated using the exchange rate at the transaction date.
Unrealized net exchange losses are recorded in the statement of operations and unrealized net
exchange gains are deferred until realized.
d) Financial instruments
The Company may use interest rate swaps, currency swaps and forward and option contracts to
manage risks generally associated with foreign exchange rate risk and interest rate risk. Derivatives
used for hedging purposes are designated and effective as a hedge of the identified risk exposure
at the inception of the contract. Accordingly, changes in fair value of the derivative contract are
highly effective at offsetting the changes in the fair value of the underlying hedged item at
inception of the hedge and are expected to remain highly effective over the life of the hedge
contract. All derivative financial instruments are reported on the balance sheets at fair value.
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